For a Multi-Unit Developer, what is the development fee for the second Southern Steer Business that the Multi-Unit Developer is committed to develop under the Development Schedule?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- Development Fee. In consideration of Franchisor granting the Multi-Unit Developer the right to develop multiple Southern Steer Businesses in the Development Territory, Multi-Unit Developer will pay the Franchisor a development fee ("Development Fee") in an amount equal to:
- (a) The Initial Franchise Fee set out in the Initial Franchise Agreement for the first Southern Steer Business that the Multi-Unit Developer is committed to develop under the Development Schedule;
- (b) $49,500 for the second Southern Steer Business that the Multi- Unit Developer is committed to develop under the Development Schedule; and
- (c) $42,000 for the third Southern Steer Business that the Multi-Unit Developer is committed to develop under the Development Schedule.
For the avoidance of doubt, the total amount of the Development Fee is set forth in Attachment A of this Agreement.
- Development Fee Due. The Development Fee set out in Attachment A is due upon the Multi-Unit Developer's execution of this Agreement.
- Fees are Non-Refundable. The Development Fee will be nonrefundable and will be fully earned by the Franchisor when the Development Fee is paid by the Multi-Unit Developer even if Multi-Unit Developer fails to develop any Southern Steer Businesses under the terms of this Agreement.
[Item 5: and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations.]
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, a Multi-Unit Developer is required to pay a development fee for each Southern Steer Business they commit to develop under the Development Schedule. The development fee for the second Southern Steer Business is $49,500. This fee compensates Southern Steer for granting the Multi-Unit Developer the right to develop multiple locations within a specific territory.
It is important to note that this development fee is non-refundable and is fully earned by Southern Steer upon payment, regardless of whether the Multi-Unit Developer successfully opens all the committed Southern Steer Businesses. This means that even if the developer fails to develop any Southern Steer Businesses under the terms of the agreement, they will not receive a refund of the development fee.
Furthermore, the FDD states that payment of the development fee will be deferred until Southern Steer has satisfied their pre-opening obligations, and the franchisee has commenced business operations. This amendment provides some financial relief to the franchisee, as they do not have to pay the fee upfront. Instead, the payment is due once the franchisee has started operating their Southern Steer Business, aligning the payment with the commencement of revenue generation.
Prospective Multi-Unit Developers should carefully consider the implications of the non-refundable development fee and the development schedule before entering into an agreement with Southern Steer. It is crucial to conduct thorough due diligence and assess the viability of developing multiple locations within the designated territory to mitigate the risk of losing the development fees.